In this month's tracker, Construction Forecasting and Research reveals a downturn in activity levels in May – although the industry remains bouyed by a positive long-term outlook
Activity in the construction industry deteriorated in May after two months of growth, reflecting the downturn in orders and tender enquiries reported last month. Only in large firms did activity levels rise, although less rapidly than last month.

The outlook for the industry is fairly benign. The balance of tender enquiries and employment was broadly unchanged, although the orders situation improved slightly. Large firms are the most optimistic, having experienced a significant jump in orders and a slightly more moderate rise in tender enquiries.

In three of the five main indicators – activity, tender enquiries and order books – most regions recorded negative balances. Only two regions experienced positive growth in activity balances, and there were only three positive regional balances for tender enquiries and order books. East Anglia and the East Midlands both reported positive balances in two of those three indicators.

In its recently released summer 2002 forecasts, CFR suggests that the longer term outlook for the industry remains positive. This is largely a result of government expenditure plans for transport, health, education and social housing boosting construction activity and causing the sector to outperform the economy as a whole.

The outlook for the infrastructure sector remains by far the brightest with output forecast to rise 25% by 2004. In contrast with public housing, the private housing sector is expected to experience the onset of a decline in 2004.

The survey is conducted monthly among some 800 firms throughout the United Kingdom and the analysis is broken down by size of firm, sector of the industry and region. The results are weighted to reflect the size of respondents. In addition to the results published in this extract, all of the monthly topics are available by sector, region and size of firm. Quarterly questions also seek information on materials costs, labour costs and work in hand.

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Postscript

This an extract from the monthly focus survey of construction activity undertaken by Construction Forecasting and Research on behalf of the European Commission as part of its suite of harmonised EU business surveys. The full survey results and further information on CFR's forecasts and services can be obtained from CFR by phoning 020-7808 7070 or logging on to www.constructionfutures.co.uk.